This book constitutes a follow-up and extension of Employment in Poland 2005. In this issue we analyse the influence of demand-side factors on Polish labour market and especially so from the macroeconomic and regional perspectives. We begin with macroeconomic look at the labour markets in eight – out of ten – states which joined the EU in 2004. We focus on identifying aggregate disturbances which had a crucial influence on the economic fluctuations within the CEE region in the period 1994-2005, and we assess to what extent these disturbances are responsible for different dynamics of unemployment and employment trends in the examined countries and to what extent different fiscal and monetary approaches adopted at that time contributed to remedy these disturbances. The key finding resulting is that the relatively most significant decrease in employment and increase in unemployment levels in Europe, which came about in Poland after the year 2000, are due to the idiosyncratic decrease in return on capital and total factor productivity [TFP] dynamics. We also find that, although the policy-mix adopted in the above period was not the direct cause for the slowdown, its role in accommodating the shock was probably moderately negative. Then we study regional differences in the labour market in Poland in the period 2000-2005. We analyse aggregate data and identify microeconomic factors affecting trends in job creation and destruction. We group the NUTS4 regions in Poland in six homogenous clusters and find that in the period 2000-2005 no significant changes in the labour market indicators occurred either between clusters or between voivodeships (NUTS2 regions). This is so because the direction and depth of fluctuations on the regional scale were generally shaped by aggregate shocks which affected the economy as a whole. Moreover, the above period saw a greater differentiation in terms of productivity and thus, in most parts of Poland, increasing employment and unemployment rates are due to the development of labour-intensive manufacturing. We argue that only the largest urban conglomerations in Poland have adopted the development model which supports high economic growth in medium and long term. In third part of the study we focus on spatial mobility of Polish workers. In case of both internal and international migrations we demonstrate that economic factors determine significantly decisions about changing place of residence and that the key incentive to migrate is higher wages in the destination location and a relatively worse situation in the labour market in the region of origin. We also estimate the scale of international migration from Poland, which indicate that the number of people who stayed abroad for more than two months in the year 2005 was higher by approximately 165,000-379,000 people than before EU accession, due to one-time increase in migration flows. Moreover, we point out that international migration is mostly seasonal and that emigrants retain strong ties with their homeland. As for internal migration, we argue that its aggregate intensity is relatively modest and we emphasise that although in general the population moves from smaller to larger conglomerates, the limited scale of these movements makes the progress in urbanisation being slow and agglomerations less numerous than in other EU member states. In the long run, this may constitute an obstacle for real convergence to the most developed EU countries. Finally we scrutinize work in the non-observed economy (NOE) in Poland. According to various methodologies we asses the NOE output at 15-30 per cent of the GDP, and we find that the main reasons behind the existence of the grey economy in Poland are overly burdensome fiscal policy and excessively restrictive economic regulations. We close the report with demonstrating links between areas we studied and implications for labour market and economic policy in Poland.

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